To drive innovation and customer-centricity, our business processes and operating models need to embrace Agile and this evolution is crucial if business is to adapt and continuously improve, says Natal Dank
Even before the pandemic changed our working lives forever, business was in search of organisational agility. In the face of disruption and increasing complexity traditional business processes and operating models were simply proving too slow and unable to respond.
Business agility is not a new concept of course, but the pursuit of these changes in how we work has now been crystallised in our response to the pandemic. The need to quickly assess strategic business needs, determine end-customer value, rapidly prioritise tasks and pivot direction are now crucial just to stay in business, let alone take advantage of the changing market. Added to this are the safety and wellbeing of your people. Circumstances have simply forced many organisations to quickly make alternative plans, with no chance to perfect them and knowing they will need to be reassessed and likely change within weeks, days or even hours.
For example, there has been a growing demand among employees to work remotely and to support flexible, distributed teams. The impact of Covid-19 was a need to urgently make this a reality, even for sectors that weren’t previously considering such changes. Before the pandemic, business forums discussed how the customer experience was being digitalised and the need for organisations, no matter the industry, to transform their operational model to support digitalisation. However, the context of these discussions was a timeframe of many years. The pandemic has compressed this time horizon to a matter of months forcing organisations to immediately confront the challenges of embracing agility. A recent McKinsey study reports a seven-year increase since the beginning of covid-19 in the speedup of business across the world digitally enhancing existing products and services or creating new ones. As a result, the need to work Agile has become a business imperative.
What is Agile?
Agile began in software development more than 20 years ago to manage risk and develop great products in the context of uncertainty. With the rise of the internet, customer choice exploded, and consumer preferences began to quickly evolve. In such an environment it was becoming too risky to plan everything upfront, ‘waterfall’ style in Gantt charts. The customer’s first exposure to a finished product only followed the traditional project sequence of budget, plan, design, test and implement and requirements may have changed during this time (months or years). In any case, it’s well-known that a product never survives its first exposure to a real customer or user. The waterfall approach was simply too slow and unable to respond quickly enough.
To address these issues, Agile aims to get slices of value to the customer early and often. Goals remain the same, but rather than detailing every feature upfront, we focus on the most valuable thing to work on first. The aim is to design and deliver an MVP (minimal viable product) to the customer within one-two weeks and never longer than a month. We test the MVP with real users and adapt our plan based on the user feedback. If some or all the prototype was successful, we can further develop the positive elements and dump the negative. If the prototype is deemed to have failed testing, we have the option of going in a different design direction. Importantly, if we proceed along the same lines, we know we are doing this based on evidence rather than, for example, the highest paid person’s opinion (HiPPO). Conversely, we’ll feel less need to defend our MPV if it fails because we have invested relatively little effort in its development. These two facets of the Agile approach go some way to removing ego from the process.
The essence of Agile is to place your customer at the heart of everything you do and incrementally deliver value through this feedback-driven loop of plan, do, review, adapt. Key to adopting this Agile ‘virtuous cycle’, solving complex problems and rapidly responding to customer needs is to work in multi-functional teams that contain all necessary skills. Moving at pace, we must trust these teams to get on with the job and use visualisation techniques to collaborate, self-organise and make transparent real-time decisions. Some of these tools and frameworks, such as Scrum and Kanban have now become commonplace.
Evolving business processes with Agile
So, given the increasingly complex and disrupted business environment in which we now operate, a waterfall approach is just too risky for large scale projects or innovative product design. However, the organisational design of many businesses today contains a host of barriers to the adoption of Agile. HR processes and systems that are required to support Agile ways of working, still often reflect a traditional, command and control pyramid structure. Unfortunately, such a top-down, hierarchical approach to managing people, tends to foster the view that employees are a costly resource, rather than the complex, emotive human beings that we are.
Tech has universally embraced Agile but in most organisations, non-tech projects are planned, budgeted and forecasted upfront, then linked to annual KPIs and targets. Each component of the plan is overseen by a different department, there are frequent handovers of work and decisions are pushed up and down the hierarchy in order to get the job done. Until recently, waterfall style planning offered a sense of certainty and control (albeit illusionary) in the working world. The recent pandemic has dispelled the remnants of this myth, superseded by a need for rapid prioritisation and constant replanning.
To drive innovation and customer-centricity, our business processes and operating models need to embrace Agile. This evolution is crucial if business is to adapt and continuously improve. The emergence of solutions to complex problems is only possible by harnessing creativity, not imposing predetermined results such as scorecards and pre-set metrics. Experimentation, in an environment of psychological safety, where it’s ok to fail, becomes an essential business tool and drives decisions based on empirical evidence and data.
The implications for our operating models within business are numerous and significant. For example, to what degree can an organisation enable team-based decision making that is much closer to the end-customer? Also, how can the rules, policies and roles be simplified to allow for speed to market and real-time decisions? The essential elements of this evolutionary change are:
- From hierarchy to networks – reducing the dependency on hierarchical, management-heavy, decision-making structures, and facilitating business decisions organically through networked, self-organising and team-based models.
- From functional roles to projects – moving away from rigid, resource plans based on functional units and management reporting lines, towards project-based work, where the movement of people is more fluid, and based on end-customer needs and capability requirements.
- Customer value streams – shifting from operative models based on product lines towards teams joined up along end-customer value streams with the aim of creating an end-to-end customer experience or journey
- Transparency and knowledge sharing – challenging the traditional culture of information equals power. Beginning to transparently share all available data across the wider business to enable real-time business decisions and team-based problem solving close to the end-customer.
- Doing one thing well – shifting from detailed, upfront planning listing everything that will be worked on annually. Developing instead, a prioritised business portfolio that focuses effort on the most important end-customer need or business problem. This ensures one job is done well rather than spreading people’s talents across multiple projects at the same time.
- Agile business planning – moving beyond the annual budgeting cycle, towards allocating funds in response to changing circumstances. This is a rolling and ongoing approach to budgeting and tracking company performance.
- Simplification and removing waste – simplifying support functions and reassessing the value of internal processes so they enable rather than hinder the business. This is a key consideration for HR where our projects are often imposed ‘on the business’ rather developed in conjunction ‘with the business’.
What are the implications for HR and the future of work?
The degree to which traditional HR must change to be more Agile is significant. On the bright side, besides the need to support the business, this is HR’s chance to finally earn a proper seat at the table. HR touches on every aspect of every organisation and should be viewed as a key contributor. Unfortunately, HR was been held back by a uneasy combination of ever-growing lists of needs to be delivered and a lack of hard evidence to prove its worth.
For example, the static frameworks of HR ‘best practice’, such as annual performance appraisals, managed career pathways and documented job descriptions are failing to meet the needs of our rapidly changing, working world. As technology and digitalisation transforms the workplace, knowledge has become intangible and multi-sourced, while jobs have fragmented, and even whole careers have disappeared and new ones appeared, as industries quickly evolve. Digitalisation creates a personalised and enriched customer journey within the marketplace, so our employees now demand the same personalised experience at work, full of moments that matter for our people and brand. Employees are also multi-generational, diverse and want constant communication, individualised feedback, and a good values-fit.
In this new working paradigm, the traditional career ladder of job status and pay increases, no longer reflects the realities of the workplace. An individual contributor or high performing team can impact the business bottom line more than the whole management team. With this evolution of the workplace comes increasing demands for more dynamic, meaningful ways to reward and recognise people’s contribution, and frameworks that move beyond the traditional system of performance ratings and individual bonuses.
These modern and complex challenges call for HR to embrace a different, more progressive way of working. One that builds a shared value for the business, end-customer and employee. Our existing HR portfolio is out-of-date and unable to deal with these new workplace trends and organisational design needs. It’s also time to realise that HR alone cannot solve these complex problems and only by working with people, rather than on people, can we move away from our waterfall legacy and find the answers together. The challenge is clear. We need to modernise our business processes and embrace Agile if we are meet the demands of the future of work.
Natal Dank is a pioneer in the Agile HR movement, heads up learning, coaching and community at PXO Culture, and is co-author of Agile HR (published by Kogan Page, Nov 2020).
